Excluding financials on these properties. Looking at a new home build and just contemplating from a rentability standpoint is a larger two story (4/3.5 bath) with zero lot line and no yard (community amenities) or a single story 3/2 with a small bit of a yard (low maintenance). Generally all things being equal what renters will gravitate toward which property...
Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
8mo
If I were looking at this, the first thing I would do is check with the insurance companies and see if there's a difference in insurance between the two.
As far as renters preferring one or the other, it would be smart to figure out if each is in a class class B, C, or D area, because the renters in each can have different credit profiles.
Also you should try and get an idea of the average rent on each type of rental in the immediate vicinity, as well as tour some of the competing units and see what they're offering for the money compared to the ones you're considering buying.
Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
8mo
If I were looking at this, the first thing I would do is check with the insurance companies and see if there's a difference in insurance between the two.
As far as renters preferring one or the other, it would be smart to figure out if each is in a class class B, C, or D area, because the renters in each can have different credit profiles.
Also you should try and get an idea of the average rent on each type of rental in the immediate vicinity, as well as tour some of the competing units and see what they're offering for the money compared to the ones you're considering buying.
1. I don't think you are asking the right question. It will likely be mostly 2 different tenant groups looking at these 2 different kinds of houses.
The larger house will certainly cost more to build and I presume you will want/need/expect to charge more rent for it. This likely means the tenant who chooses it NEEDs 4 bedrooms and has to pay the premium to have that larger home while most people who only need 3 bedrooms will go with something lower priced.
2. I think more reasonably what you want to know is what the demand is like for a larger home versus a smaller one at their respective price points. I don't think that will be easy to assess.
However, I think its reasonable to assume a modestly thinner market for the larger home. So, I would underwrite a little more vacancy cost is all.
3. Speaking of vacancy/turnover, these are "family sized" homes. However, the lack of outdoor space does not sound like most people's idea of what they want in a forever home. Do you expect in your market that tenants will stay in these homes an average amount of time or shorter than average? If so, again I would underwrite for more vacancy.
Rental Property Investor · Seattle, WA · Member since 2013 · 2k+ posts · 1k+ votes
8mo
Personally, I would prefer the no yard option over the small yard option. I don't want any maintenance, I will walk away from the house to get out in nature. I could see a small yard appealing to families with pets or children if they have been living in apartment complexing with no personal outdoor space.
Agree that four bedrooms is a lot. I found it difficult to find enough comps to get good market rent on 4 and 5 bedroom houses, there aren't enough of them around for rent. Which helps with desirability (and longer tenancy maybe) but outliers can also be riskier. I could see a large family, foster parents, or two work from home professionals wanting four bedrooms. Two story will turn off people who are older or have health issues, single story has more flexibility. I think moving from one to two bathrooms is a game changing but after that it is just more to clean and you may not get a premium for more.
Real Estate Consultant · Denver, CO · Member since 2026 · 38 posts · 8 votes
8mo
In my experience, if there is a good community amenity close by, the yard will not bring in extra demand, it could actually be a negative, depending on the maintenance and responsibilities of the renter.